[chinaco]

Quote:

Originally Posted by saluki9 And did the policyholders not receive back substantially all of their investments from the Credit Lyonnais buyout and subsequent lawsuit and settlement?

Good point. Unless there is out and out fraud (and the company has been hollowed-out (unlikely with today's regulations)... A white knight shows up to take over the book of business, assets and brand name (sometimes to get a complementary fit with a gap in their own market coverage). Many times the problem winds up being a liquidity problem... (the assets are actually there to cover it but timing issues arise).

For example I know of one company where the regulators were stepping in because they could not meet the run on annuity 1099 transfers because they had assets tied up in securities that had certain provisions where the risks that were not apparent (i.e., liquidity problem). An Actuarial flaw in the securities backing the products and the anticipated persistence of the annuities.

In this case a white knight that has excess liquidity stepped in and could carry the company over the hump for a couple years... now the company (a subsidiary now of the white knight) is extremely profitable.

Bottom line... There are too many insurance companies today. The market is still a bit fragments. There will be much (more) M&A in that industry over the next several years. If you were to look at the number of insurance companies (individual enterprise entities) just as far back as 1990, half have disappeared mainly through M&A. Some believe there will be two categories. A few dozen (Domestic) Mega Insurance Power Houses and quite a few niche players that offer exotic products (smaller and entrepreneurial willing to take risks). Of course there will be several dozen international powerhouse insurance companies. The international borders are blurring with the international financial services conglomerates that are being put together via M&A.